Lee Bok-hyun, Governor of the FSS, Holds Press Briefing on 2025 Work Plan
Proceeding with the Third Phase of Stress DSR Regulation as Originally Planned is Appropriate
Lee Bok-hyun, Governor of the Financial Supervisory Service, is holding a press conference on the 10th. Photo by Financial Supervisory Service
Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), expressed his intention to proceed with the Debt Service Ratio (DSR) regulation as originally planned. Recently, the political sphere requested the financial authorities to temporarily ease DSR regulations, at least for unsold houses in provincial areas, to revive the sluggish real estate market. However, due to ongoing concerns about rising house prices and increasing household debt, he stated that the introduction of the third phase of the stress DSR, scheduled for July, will proceed without disruption. He also mentioned that specific details will be decided after sufficient communication with the market.
On the morning of the 10th, at the FSS auditorium in Yeouido, Seoul, while announcing the ‘2025 FSS Work Plan,’ Governor Lee responded to a question regarding the temporary easing of DSR regulations by saying, "I am well aware of the political opinions concerning the stagnation of the provincial real estate market, and together with the Financial Services Commission Chairman, we are open-mindedly considering various possibilities." However, he added, "Given that over 70% of the public’s assets are concentrated in real estate, I have a fundamental concern about whether stimulating demand to revive the real estate market is a sustainable approach."
He stated, "Considering the overall household debt level and concerns about rising house prices, there is no disagreement on the policy direction to proceed with the introduction of the third phase of the stress DSR regulation as planned." He added, "However, regarding specific details, we need to communicate with the market and comprehensively establish and develop the direction."
Governor Lee also emphasized, "To ensure consistent and stable management of household debt, we will establish a sophisticated management system for household loans and continue to induce a gradual reduction in the household debt ratio through preparations for the implementation of the third phase of DSR." Regarding real estate project financing (PF) defaults, he explained, "In the case of PF defaults, which could become a trigger for our economy, we will promote a virtuous cycle of funds and enhance the soundness of financial institutions through the establishment of a regular evaluation system for projects and close guidance on project liquidation and restructuring." In this regard, the FSS plans to conduct a comprehensive review of PF, real estate-related household debt, corporate loans, and individual business loans with high interconnectivity to strengthen management of vulnerable areas and improve regulations.
Regarding the reappointment process of Ham Young-joo, Chairman of Hana Financial Group, Governor Lee pointed out that while there were no violations of regulations, there were some disappointing aspects in terms of practical effectiveness. Previously, Hana Financial Group amended its internal governance rules to allow Chairman Ham to complete a three-year term upon reappointment.
Governor Lee said, "Although there was no specific violation of regulations, it is regrettable that only half of the practical intent was fulfilled." He added, "According to the spirit of the governance best practices, it is preferable to set candidate selection criteria before the appointment process and before specific candidates come into view, but this recent amendment seems to fulfill only about half of that intent."
He continued, "If the regulations had been changed a little earlier, it would have looked much better." He concluded, "Ultimately, this is a matter to be decided at the shareholders’ meeting, and the remaining issue will come down to how Chairman Ham establishes a succession plan and grows Hana Financial over the next three years."
In response to a question about the timing of the management evaluation rating for Woori Financial Group, he emphasized, "Regarding Woori Financial, we must maintain a strict stance on consumer protection and risk management."
Governor Lee said, "Regarding this, there are licensing applications submitted to the FSS, including insurance company mergers and acquisitions (M&A) and the final approval of securities firms. I believe we should not hinder Woori Investment & Securities from securing its own capabilities, so we plan to expedite the smooth processing of the securities firm’s final approval."
Regarding the insurance company acquisition review, he said, "Since the review period is two months, we will expedite the FSS review process to allow the Financial Services Commission sufficient time to evaluate the financial institution." He added, "We will thoroughly review both financial and non-financial factors."
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